Is It Time To Consider Buying Deckers Outdoor Corporation (NYSE:DECK)?

Deckers Outdoor Corporation (NYSE:DECK) led the NYSE gainers with a relatively large price hike in the past couple of weeks. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Deckers Outdoor’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Deckers Outdoor

Is Deckers Outdoor Still Cheap?

Deckers Outdoor is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Deckers Outdoor’s ratio of 32.49x is above its peer average of 17.94x, which suggests the stock is trading at a higher price compared to the Luxury industry. Furthermore, Deckers Outdoor’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Deckers Outdoor?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 23% over the next couple of years, the future seems bright for Deckers Outdoor. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in DECK’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe DECK should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on DECK for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for DECK, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Deckers Outdoor as a business, it's important to be aware of any risks it's facing. For example - Deckers Outdoor has 1 warning sign we think you should be aware of.

If you are no longer interested in Deckers Outdoor, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.